Food & Drink1 min ago
VAT Registration delay - compensation
5 Answers
I set up a small Employment agency in January 2009, and registered for VAT on the 15th January. Since then I have not heard anything from them so took the initiative and called them. They are not the most helpful bunch and simply pass me off by saying 'we are very busy at the moment and everything is taking it's time'. The thing is I am paying out VAT every week to my contractors, and having to 'factor' the money to pay them. My factoring company charge me for what I borrow, so it is costing me money. Can anyone tell me if I will be able to put in a claim against HMRC for the interest I am paying? I understood I was supposed to have a registration number and certificate within 13 weeks of application. I am betting they won't be so patient when it comes to me paying my VAT bill!
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You either would be due to pay a VAT bill or you would be in a repayment situation. Which is it?
Given the line of business then, presuming you are trading profitably you should have a quarterly VAT bill (I appreciate there may have been some set up costs that had high VAT to begin with) to pay. In which case, if they are late in setting you up you've had the benefit of the cash for longer and if anything they should be charging YOU interest!
However, presuming you actually need to be VAT registered (can't be that small an Agency then!), you shouldn't have left it this long and there's no way you should accept the fob off excuse you've had. It should all be dealt with inside a month easily. Something has gone very wrong somewhere.
Given the line of business then, presuming you are trading profitably you should have a quarterly VAT bill (I appreciate there may have been some set up costs that had high VAT to begin with) to pay. In which case, if they are late in setting you up you've had the benefit of the cash for longer and if anything they should be charging YOU interest!
However, presuming you actually need to be VAT registered (can't be that small an Agency then!), you shouldn't have left it this long and there's no way you should accept the fob off excuse you've had. It should all be dealt with inside a month easily. Something has gone very wrong somewhere.
Neatly put, S. I couldn't work that one out either.
If one is not yet VAT registered, its impossible to be charging VAT to one's clients - which I assume is what is not happening - hence the gap between funding that BDW is filling by use a factor to borrow money - because VAT is being paid to 'suppliers' but not collected from the clients.
The implication is that once VAT registration occurs, BWD expects to be back-invoicing to the clients for the VAT element of services invoiced since January. Can't think they are going to be too impressed with that going back 5 months.
If one is not yet VAT registered, its impossible to be charging VAT to one's clients - which I assume is what is not happening - hence the gap between funding that BDW is filling by use a factor to borrow money - because VAT is being paid to 'suppliers' but not collected from the clients.
The implication is that once VAT registration occurs, BWD expects to be back-invoicing to the clients for the VAT element of services invoiced since January. Can't think they are going to be too impressed with that going back 5 months.
http://www.hmrc.gov.uk/vat/start/register/wait ing.htm
Not so bm. If one requires to register for VAT then, having applied for it, you are required to charge VAT even in the interim period without a number. The same link above also highlights that an application should take 30 days maximum though can take up to six months if there's reason to launch an investigation.
However, you only need register for VAT if your turnover in the past 12 months tops �68,000 or if you expect it to do so in the next 30 days. You can voluntarily register before that of course but I've no idea why you would if you didn't need to and weren't going to be in a repayment position. Maybe if there were very large set up costs? I'm not really clear why a "small employment agency" would apply the secodn it was set up.
Either way it's irrelevant. There's either a VAT bill going to occur or there isn't. If there's a bill then BDW is saving funds and interest at the moment because he's not paid it. If there's a repayment then presumably the business is loss-making and there won't be a VAT bill to worry about paying in the future so the last sentence is irrelevant.
Not so bm. If one requires to register for VAT then, having applied for it, you are required to charge VAT even in the interim period without a number. The same link above also highlights that an application should take 30 days maximum though can take up to six months if there's reason to launch an investigation.
However, you only need register for VAT if your turnover in the past 12 months tops �68,000 or if you expect it to do so in the next 30 days. You can voluntarily register before that of course but I've no idea why you would if you didn't need to and weren't going to be in a repayment position. Maybe if there were very large set up costs? I'm not really clear why a "small employment agency" would apply the secodn it was set up.
Either way it's irrelevant. There's either a VAT bill going to occur or there isn't. If there's a bill then BDW is saving funds and interest at the moment because he's not paid it. If there's a repayment then presumably the business is loss-making and there won't be a VAT bill to worry about paying in the future so the last sentence is irrelevant.
OK guys, maybe i need to explain things a little better. My business is supplying contract staff. I only have 8 contractors out working, but my weekly invoice figure is currently over �5000 per week. I will therefore soon pass the �68,000 threshold. Because turnover in this area of business is so high, I was told to register for VAT from the start. So the application was put in on 15th January. You are NOT allowed to charge VAT on your invoices without a registration number, as a separate charge. The VAT office recommends that you incorporate VAT into your net invoice figure until you receive your registration. This however would cause a tremendous headache, and does not make good business sense. The VAT office is simply giving themselves time because they are woefully understaffed, and are also having to deal with a record number of insolvencies. Once my registration finally arrives, I will have to send all my clients an invoice for 6 months of backdated VAT. This is not an expense for them, because they can very soon reclaim it. I on the other hand cannot reclaim anything until I have my registration. Which brings me back to the original question. I am having to pay VAT to the contractors on my payroll, because they work through Umbrella Ltd Companies. This money has to be borrowed from the bank, so I am paying interest on the money I have to pay out in VAT, because I have had to wait for so long. So my question is, will I be able to apply for compensation because of the time the VAT office have taken?
The other thing I would like to point out is the VAT office recommends you do not chase them for progress, as this will hinder your application!!!!
The other thing I would like to point out is the VAT office recommends you do not chase them for progress, as this will hinder your application!!!!
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